Attached is an executive summary detailing the typical investment structure for an investor with SFA. Email sm@sfalts.com for more information regarding current offerings.

1. Strategic Funding Alternatives • Investments • Management
312 Route 38 West Suite 100, Moorestown, NJ 08057 • (856) 437-6196 • www.sfalts.com
EXECUTIVE SUMMARY
January 2019
General Background
Set forth below is a summary of the investment structure in a typical SFA-sponsored deal. For
illustration purposes, assume a building acquisition cost of $5 million and that the investor group
(“Investor Group”) invests $1.5 million, with the balance of the purchase price ($3.5 million)
financed through a third-party lender (e.g. bank). The Investor Group owns 70% of the project (at
a cost of $1.5 million), with an affiliate of SFA, SFA Holdings, LLC (“Holdings”), owning 30%.
The Investor Group has no liability for the bank debt or any other liabilities. The bank debt is
secured by a first mortgage on the property and generally the bank requires a guaranty by the
principals of the Sponsor.
The types of investments vary from project to project, but generally the Sponsor is looking for a
value-added investment. Generally, this is accomplished through locating projects with issues
concerning management, capital improvements, tenant-related and the like. With capital
improvements, improved tenant relations and other improvements to the property, the expectation
is that within a three to five year period, the Sponsor will be able to refinance the property and pay
the Investor Group a substantial portion of its equity investment.
If the Sponsor returns 75% or more of the initial investment to the Investor Group within 18 months
of the acquisition of the property, the Investor Group / Sponsor split will be 50/50%.
If the Sponsor returns 75% or more of the initial investment to the Investor Group beyond 18 months
of the start of the investment period, the Investor Group / Sponsor split will be 60/40%.
Summary of Investment
Before Holdings receives any distributions, the Investor Group is to receive an 8% preferred return
on its unreturned capital, paid in quarterly installments. In the event of a shortfall in a particular
year, such shortfall is made up in subsequent years before any distributions to Holdings. Once the
preferred return is paid during a particular year, any additional distributions are allocated between
the Investor Group and Holdings on a 70/30 split.
Illustration:
A. During Year 1, the 8% preferred return on unreturned capital totals $120,000 (8% of
$1.5 million), which is paid to the Investor Group in installments of $30,000 per quarter.

2. Strategic Funding Alternatives • Investments • Management
312 Route 38 West Suite 100, Moorestown, NJ 08057 • (856) 437-6196 • www.sfalts.com
B. Assume in Year 2, due to rental increases and management efficiencies, the property has
an additional $60,000 of available cash (i.e., $60,000 over and above the $120,000
preferred return amount), that additional $60,000 will be split 30% to Holdings
($18,000) and 70% to the Investor Group ($42,000). Accordingly, during Year 2, the
Investor Group will receive a total distribution of $162,000. For this particular year,
the return on unreturned capital to the Investor Group is 10.8%.
C. Assume in Year 3 we are able to refinance the property, generating $1,125,000 of
distributable cash. This amount will be distributed to the Investor Group, thereby
returning 75% of its investment amount.
Note that the Investor Group will continue to receive an 8% cumulative return on its unreturned
capital until it is repaid in full. Unreturned capital is reduced only through a liquidity event, such
as a refinancing. Excess cash flow distributions do not reduce the unreturned capital. This is a
significant benefit to the Investor Group.
D. Assume during the next year the project generates $180,000 of distributable cash. This
will be distributed as follows:
a. $30,000 to the Investor Group which is an 8% preferred return on its unreturned
capital (8% of $375,000=$30,000).
b. The balance of $150,000 will be distributed 60% to the Investor Group ($90,000)
and 40% to Holdings ($60,000).
E. Assume in Year 6 the project is sold for $6 million and there remains $4 million of bank
debt. The $2 million of net proceeds will be distributed as follows:
a. $375,000 to the Investor Group to satisfy the balance of the unreturned capital.
b. The balance of $1,625,000 will be distributed 60% to the Investor Group
($975,000) and 40% to Holdings ($650,000).
Sincerely,
Stephen R. McCarthy
Director of Investor Relations
Strategic Funding Alternatives, LLC
Email: sm@sfalts.com
Phone: 215-313-0678